Global investing is no longer limited to institutions. Today, even retail investors in India can access international markets with ease. If you’ve ever wondered how to invest in US stocks from India, this step-by-step guide will walk you through the process, highlight key risks, and offer real-world examples.
Why Look Beyond Indian Markets?
India’s markets are vibrant, but they carry country-specific risks. Adding US equities helps:
- Diversify across economies.
- Access industries like AI, electric vehicles, and biotech.
- Tap into historically consistent long-term growth (e.g., S&P 500).
Step 1: Choose Your Investment Route
There are three primary ways to get exposure:
- Direct Brokerage Accounts
Open an account with an international broker that provides access to US exchanges. This gives full ownership of US-listed stocks. - Indian Brokerage Tie-Ups
Some domestic brokers collaborate with global partners. While convenient, these may involve higher charges. - Mutual Funds & ETFs
If you prefer a simpler option, invest in international mutual funds or ETFs that track indices like the NASDAQ or S&P 500.
Step 2: Documentation & KYC
You’ll need:
- PAN card
- Aadhaar or passport for ID
- Address proof
- Bank details
These documents ensure compliance under the Liberalized Remittance Scheme (LRS), which permits Indians to remit up to $250,000 per year for investments.
Step 3: Fund Your Account
Transfer money in INR, which gets converted to USD. Example:
- You transfer ₹83,000 at an exchange rate of ₹83 per USD. Your US account receives $1,000, which you can now use to invest in shares or ETFs.
This amount can now be used for buying shares or ETFs.
Step 4: Select Investments
Do your homework. For instance, instead of putting all $1,000 in one tech stock, you could allocate:
- $400 to an S&P 500 ETF.
- $300 to a healthcare stock.
- $300 to a renewable energy company.
This ensures diversification while gaining international exposure.
Step 5: Understand Taxes
- Dividends: Taxed at ~25% in the US before payout.
- Capital Gains: Taxed in India—20% with indexation if held long term (>24 months).
- DTAA: Prevents double taxation by giving credit for taxes paid in the US.
Midway Insight: Why It Works
Knowing how to invest in US stocks from India is only half the journey. The real advantage lies in balancing global exposure with domestic investments, ensuring your portfolio is more resilient to market volatility.
Pros & Cons
Pros
- Exposure to global innovation
- Potentially higher returns
- Portfolio diversification
Cons
- Forex risks
- Higher costs (brokerage, remittance)
- Complexity in taxation
Conclusion
By following a structured approach, any Indian investor can confidently learn how to invest in US stocks from India – building global exposure while managing risks and long-term goals. Start small, stay diversified, and think long term.